Justia Insurance Law Opinion Summaries

Several entities affiliated with Allstate sued a group of individuals and entities that own, manage, and operate Memorial Heights Emergency Center in Houston, Texas. The plaintiffs alleged that, starting in 2018, defendants entered into agreements with personal injury attorneys to refer clients to the Center under letters of protection, guaranteeing future payment from insurance settlements. Defendants billed these patients—primarily car accident victims—using emergency billing codes at rates far above standard charges, often conducting expensive diagnostic tests without documented medical necessity and discharging patients without additional treatment. The bills were then sent to attorneys, who submitted them to Allstate for inclusion in settlement demands. Between August 2018 and November 2022, Allstate settled with 635 claimants and subsequently alleged it discovered a fraudulent scheme, seeking to recover $4.7 million plus treble damages and attorney fees.The United States District Court for the Southern District of Texas dismissed all claims with prejudice. The district court held that Allstate failed to sufficiently allege reliance on the fraudulent bills, undermining its RICO, common-law fraud, conspiracy, unjust enrichment, and money-had-and-received claims. The court also found Allstate had not adequately pleaded direct or proximate causation, concluded that Allstate was “complicit” in the alleged fraud due to its continued settlements after learning of the scheme, and determined that the complexity of the case made it unmanageable as a single lawsuit.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the dismissal de novo. The Fifth Circuit held that the district court applied the wrong legal standards to Allstate’s RICO claims by requiring reliance, which is not necessary for a RICO claim predicated on mail fraud. The appellate court further found that Allstate adequately pleaded proximate cause, damages, and the elements of its common-law and equitable claims. The judgment of the district court was reversed and the case remanded for further proceedings. View "Allstate Indemnity Co v. Bhagat" on Justia Law

A veteran who suffered a traumatic brain injury from an improvised explosive device while deployed sought financial assistance under the Traumatic Servicemembers’ Group Life Insurance (TSGLI) program after experiencing a stroke within two years of the injury. The Army denied his claim, determining the stroke was a physical illness or disease, not a qualifying traumatic injury as defined by the relevant statute and regulations. The veteran then petitioned the Department of Veterans Affairs (VA) to amend its rules to include coverage for illnesses or diseases caused by explosive ordnance, arguing these conditions are analogous to those already covered under existing exceptions for injuries resulting from chemical, biological, or radiological weapons.The VA initially denied the rulemaking petition but agreed to further review as part of a program-wide assessment. After several years, extensive consultation with medical experts, and consideration of the petition and supporting materials, the VA issued a final denial. It concluded that expanding coverage to delayed illnesses or diseases linked to explosive ordnance would be inconsistent with TSGLI’s purpose, which focuses on immediate injuries, would deviate from the insurance model underlying the program, and could threaten its financial stability. The VA also found insufficient evidence of a direct causal relationship between explosive ordnance, traumatic brain injury, and downstream illnesses like stroke.The United States Court of Appeals for the Federal Circuit reviewed the VA’s denial under the highly deferential “arbitrary and capricious” standard of the Administrative Procedure Act. The court held that the VA provided a reasoned explanation addressing the petitioner’s arguments and the record, and did not act arbitrarily or capriciously. The petition for review was therefore denied. View "MCKINNEY v. SECRETARY OF VETERANS AFFAIRS " on Justia Law

Randy Granger was severely injured in an automobile accident while driving a company truck. The at-fault driver’s insurance paid its policy limit of $25,000, which was insufficient to cover Randy’s injuries. Randy then made a claim under his own underinsured-motorist policy with Auto-Owners Mutual Insurance Company, which paid him up to its per-person limit of $250,000. Beverly Granger, Randy’s wife, subsequently filed her own underinsured-motorist claim with Auto-Owners for loss-of-consortium damages, seeking compensation for the decline in affection, care, companionship, and services resulting from Randy’s injuries.Auto-Owners refused Beverly’s claim, treating it as derivative of Randy’s and asserting that the $250,000 per-person limit for underinsured-motorist benefits had already been exhausted by Randy’s claim. Auto-Owners then sought a declaratory judgment in the United States District Court for the Western District of Missouri, arguing it owed no further payment. Beverly counterclaimed for breach of contract. The district court granted summary judgment to Auto-Owners, concluding that Beverly’s loss-of-consortium claim was inseparable from Randy’s bodily injury claim and thus subject to the same per-person limit.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the insurance policy’s language de novo, applying Missouri law. The court found the policy ambiguous regarding whether Beverly’s loss-of-consortium claim was subject to the same per-person limit as Randy’s bodily injury claim or whether each spouse could recover under separate per-person limits for their distinct losses. Resolving the ambiguity in favor of the insured, as required by Missouri law, the Eighth Circuit held that Beverly may recover loss-of-consortium damages and is not barred by the per-person limit applied to Randy’s claim. The court reversed the district court’s judgment and remanded for entry of judgment in Beverly’s favor. View "Auto-Owners Mutual Insurance Company v. Granger" on Justia Law

The plaintiff was involved in a car accident with the defendant, after which he sought damages for the diminished value and loss of use of his vehicle, alleging the accident was caused by the defendant’s negligence. The defendant’s insurer paid the full property damage coverage limit to the plaintiff’s insurer, based on the assertion that the plaintiff had been made whole. The plaintiff then amended his complaint to allege that his insurer was unjustly enriched for accepting the payment and exhausting the defendant’s coverage before the plaintiff was fully compensated, in violation of the make whole doctrine.The case was brought in the Superior Court for the judicial district of Hartford, which dismissed the unjust enrichment claim against the insurer, finding it was not ripe for adjudication. The court reasoned that the plaintiff’s claim depended on the outcome of his negligence action against the defendant. The plaintiff appealed, and the Connecticut Appellate Court affirmed the dismissal, concluding the unjust enrichment claim would only become ripe after the plaintiff obtained a judgment against the defendant and exhausted collection efforts, because the injury was contingent on whether and to what extent the plaintiff could recover and on the defendant’s ability to satisfy a judgment.On review, the Supreme Court of Connecticut held that the Appellate Court incorrectly affirmed the dismissal on ripeness grounds. The Supreme Court ruled that a claim based on premature subrogation in violation of the make whole doctrine is ripe for adjudication even before a judgment against the tortfeasor is obtained, because the alleged injury—violation of the plaintiff’s priority right to the defendant’s insurance coverage—had already occurred. The court also found the plaintiff had standing to assert his claim. The Supreme Court reversed the Appellate Court’s judgment and remanded for further proceedings. View "Orlando v. Liburd" on Justia Law

A.B., a minor, was sexually exploited by her mother and David Barrow when she was ten years old. In February 2018, A.B. filed a lawsuit against Barrow in Alabama state court for invasion of privacy. After a bench trial in April 2022, the court found in favor of A.B., awarding her $4 million in compensatory damages and $6 million in punitive damages. During related litigation, A.B.’s attorney learned that Barrow was likely insured by Nationwide Mutual Insurance Company, and in November 2018, served a subpoena on Nationwide, which produced Barrow’s umbrella liability insurance policy covering invasion of privacy claims.Nationwide removed the subsequent coverage action filed by A.B. under Alabama’s Direct Action Statute to the United States District Court for the Northern District of Alabama. The district court granted summary judgment for Nationwide, holding that neither Barrow nor A.B. notified Nationwide of the potential duty to indemnify “as soon as reasonably possible,” as required by the policy. The district court emphasized the 58-month delay between Barrow’s conduct and Nationwide receiving notice, and found that no reasonable excuse for the delay was offered by Barrow.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s decision. The appellate court held that, under Alabama law and the terms of the policy, notice may be provided by the insured or someone on the insured’s behalf, including the injured party. However, the timeliness of notice is judged from the insured’s perspective. Because Barrow did not give notice to Nationwide within a reasonable time and offered no excuse for the delay, coverage was barred. The court rejected arguments that notice by A.B. could reset the timing requirement and concluded that summary judgment for Nationwide was proper. View "A. B. v. Barrow" on Justia Law

A longtime deputy sheriff was convicted by a federal jury of mail and wire fraud after she submitted an insurance claim for items stolen during a burglary at her home, some of which she falsely claimed as her own but actually belonged to her employer, the sheriff’s office. She also used her employer’s fax machine and cover sheet in communicating with the insurance company and misrepresented her supervisor’s identity. The criminal conduct arose after a romantic relationship with a former inmate ended badly, leading to the burglary, but the fraud conviction was based on her false insurance claim, not on the relationship or the burglary itself.Following her conviction, the California Public Employees’ Retirement System (CalPERS) determined that her crimes constituted conduct “arising out of or in the performance of her official duties” under Government Code section 7522.72, part of the Public Employees Pension Reform Act, and partially forfeited her pension. The administrative law judge and the San Francisco Superior Court both upheld CalPERS’s decision, reasoning that her actions were sufficiently connected to her employment, particularly in her misuse of employer property and resources and in the context of her relationship with the former inmate.The Court of Appeal of the State of California, First Appellate District, Division One, reversed the trial court’s judgment. The appellate court held that the statute requires a specific causal nexus between the criminal conduct and the employee’s official duties, not merely any job-related connection. The court found that the deputy’s fraudulent insurance claim, although it referenced employer property and resources, did not arise out of or in the performance of her official duties as required by the statute. Accordingly, the pension forfeiture determination was set aside. View "Myres v. Bd. of Admin. for CalPERS" on Justia Law

Lewis & Clark LTC Risk Retention Group, Inc. was placed into receivership and liquidation by the Nevada Commissioner of Insurance after financial distress. The Commissioner, acting as receiver, sued the company’s directors, alleging gross negligence and breaches of fiduciary duty relating to their management of the insurer. The allegations included knowingly relying on an unlicensed reinsurance broker, approving projects outside guidelines, operating the company in a hazardous condition, and violating Nevada statutes and regulations.After the directors moved for judgment on the pleadings, the Eighth Judicial District Court stayed proceedings while the directors petitioned for a writ of mandamus. The Supreme Court of Nevada, in Chur v. Eighth Judicial District Court, held that directors and officers can only be held personally liable for intentional misconduct, fraud, or knowing violations of the law, not gross negligence. The district court then denied the Commissioner leave to amend the complaint to meet this clarified standard, finding the amendment untimely, prejudicial, and futile, and entered judgment for the directors. The directors also moved for attorney fees and costs, which the district court denied, citing statutory immunity for the Commissioner.On appeal, the Supreme Court of Nevada found that Chur I represented a significant change in law and that, under Nevada Rules of Civil Procedure and in the interest of justice, leave to amend should have been granted. The district court abused its discretion by denying the amendment, as the proposed changes were not made in bad faith, were not unduly prejudicial, and were not futile. The Supreme Court reversed the judgment in favor of the directors, vacated the denial of attorney fees, and remanded for further proceedings consistent with these holdings. View "Commissioner of Insurance v. Chur" on Justia Law

Industrial Park Center LLC, operating as Mainspring Capital Group, owned a commercial building in Tempe, Arizona, insured under an all-risk property insurance policy issued by Great Northern Insurance Company. The building suffered structural damage attributed to years of water exposure from routine cleaning practices by a seafood distribution tenant. After an initial incident in 2010, Mainspring took several remediation steps but did not implement all recommended preventative measures. A subsequent episode of damage was discovered in 2021, leading Mainspring to file an insurance claim. Great Northern denied coverage, citing policy exclusions such as wear-and-tear and settling, and disputed whether the loss was “fortuitous.”Mainspring initiated suit in the Superior Court for Maricopa County, alleging breach of contract and breach of the implied covenant of good faith and fair dealing. The case was removed to the United States District Court for the District of Arizona. Both parties moved for summary judgment. The district court granted summary judgment to Great Northern and denied Mainspring’s motion, concluding that the loss was not fortuitous, as it was “reasonably foreseeable and almost certain to occur” given the tenant’s ongoing practices and Mainspring’s failure to take all preventative steps. The district court also awarded Great Northern attorneys’ fees.Upon appeal, the United States Court of Appeals for the Ninth Circuit observed that Arizona law does not define “fortuitous” for insurance purposes. Recognizing the issue’s novelty and importance for public policy and contract interpretation, the Ninth Circuit certified the following question to the Arizona Supreme Court: Whether property damage is “fortuitous” when, based on the insured’s knowledge at the time the policy was issued, it was reasonably foreseeable that such damage was almost certain to occur if certain preventative measures were not taken. The court’s disposition was to certify this question, not to affirm, reverse, or vacate the lower court’s judgment. View "INDUSTRIAL PARK CENTER LLC V. GREAT NORTHERN INSURANCE COMPANY" on Justia Law

A New Mexico insurance company initiated a lawsuit in Nebraska against two insurance companies, asserting claims for contribution and indemnity. One defendant, a New York insurance company, moved to dismiss for lack of personal jurisdiction, while the other defendant, a surplus insurance company, challenged a default judgment and sought to file a responsive pleading. The district court in Douglas County issued separate orders: it dismissed the New York insurer with prejudice and set aside the default judgment against the other defendant, allowing additional proceedings.After the dismissal order concerning the New York insurer, the plaintiff appealed to the Nebraska Court of Appeals, which summarily dismissed the appeal for lack of jurisdiction. The case returned to the district court, where the plaintiff voluntarily dismissed its claims against the remaining defendant without prejudice. This second dismissal order did not reference the prior dismissal of the New York insurer. The plaintiff then filed another appeal, again challenging the earlier dismissal order. The Court of Appeals dismissed this second appeal for lack of appellate jurisdiction, citing the absence of a single judgment resolving all claims against all parties as required by Nebraska statutes and referencing the Nebraska Supreme Court’s decision in Elbert v. Keating, O’Gara. The plaintiff petitioned for further review.The Nebraska Supreme Court reviewed the case and held that, because the district court had not entered a single written judgment adjudicating all claims and all parties, nor certified any order as final under the applicable statute, there was no final, appealable order. Therefore, the Supreme Court determined it lacked appellate jurisdiction and affirmed the dismissal of the appeal by the Court of Appeals. The court emphasized that jurisdiction cannot be created by voluntary dismissal without prejudice of unresolved claims or parties in the absence of a final judgment. View "Continental Indem. Co. v. Starr Indem. & Liab. Co." on Justia Law

A driver, Ngoc Troung, was rear-ended by Marcus Sanders, whose vehicle was insured by Old American Indemnity Company. The impact rendered Troung’s vehicle inoperable, requiring repairs that included a new tire, exhaust system components, and other parts. The insurer initially paid for some repairs but later deducted $313.79 for “betterment”—a reduction based on the idea that new parts improved the vehicle beyond its pre-accident state. Troung had to pay this balance to retrieve his car and subsequently sued, arguing that Louisiana law does not allow for such deductions in third-party tort claims and seeking penalties for the insurer’s actions.The First Judicial District Court (trial court) held that betterment deductions were permissible because they were not expressly prohibited by Louisiana law or jurisprudence, and therefore did not consider Troung’s bad faith claims. On appeal, the Louisiana Court of Appeal, Second Circuit, reversed, finding that neither the law nor public policy allows a tortfeasor or insurer to reduce a not-at-fault party’s recovery for betterment in third-party tort claims. The appellate court also found the insurer acted in bad faith by imposing the betterment deduction and awarded statutory penalties.The Supreme Court of Louisiana reviewed the case on writ of certiorari. It affirmed the appellate court’s holding that Louisiana law does not permit a tortfeasor or their insurer to reduce a third-party tort victim’s property damage recovery by a betterment deduction. However, the Supreme Court reversed the award of penalties, concluding that the insurer’s conduct did not constitute a misrepresentation of pertinent facts and that penalties were not warranted because the legal issue was one of first impression. Thus, the Supreme Court affirmed in part and reversed in part. View "Troung v. Sanders" on Justia Law